SHFE Zinc Hovers at Highs, Attention on Subsequent Macro Guidance [SMM Zinc Morning Comment Dec 12]

US CPI rose for two consecutive months; EU ambassadors agreed on Wednesday to impose the 15th round of sanctions on Russia; OPEC lowered its oil demand growth forecast for the fifth consecutive month; US officials stated that Russia might launch another experimental "Hazel" missile towards Ukraine in the coming days; it is reported that Bank of Japan officials are open to a rate hike in December; Bank of Canada cut interest rates by 50 basis points for the second consecutive month; Vice President Han Zheng met with the French delegation of the sixth China-France High-Level Dialogue; Ma Ying-jeou will lead a delegation to visit the mainland from December 18 to 26.

Overnight, LME zinc opened at $3,147/mt, briefly rose to $3,170/mt after the opening, then fell all the way down to around $3,120/mt, and subsequently hovered below the daily moving average, hitting a low of $3,109/mt, and finally closed down at $3,119/mt, down $30/mt, a decline of 0.95%. Trading volume increased to 6,945 lots, and open interest decreased by 297 lots to 240,000 lots. Overnight, LME zinc recorded a bearish candlestick, with the 5-day moving average providing support below. LME zinc inventory decreased by 2,100 mt to 274,950 mt, a decline of 0.76%. The US dollar index rose, putting pressure on zinc prices, but subsequently, the US November CPI rose for two consecutive months to 2.7%, in line with market expectations. The market's expectation for a 25 basis point interest rate cut by the US Fed in December strengthened, and overall, LME zinc remains at high levels.

Overnight, the most-traded SHFE zinc 2501 contract opened at 25,790 yuan/mt, hovered around the daily moving average after the opening, fell below the daily moving average to a low of 25,775 yuan/mt during the session, briefly rose to a high of 25,900 yuan/mt near the close, and finally closed down at 25,855 yuan/mt, down 15 yuan/mt, a decline of 0.06%. Trading volume decreased to 53,275 lots, and open interest decreased by 1,770 lots to 138,000 lots. Overnight, SHFE zinc recorded a bullish candlestick, with the 10-day moving average providing support below. As the weather turns colder, downstream demand may decline, coupled with a slight improvement in supply, the fundamentals support for zinc prices weakens, but the market is still digesting previous optimistic sentiment, and overall, SHFE zinc hovers at highs.